City Manager Discusses Changes to Electric Ordinance

City of Milford’s current electric substation on Elks Lodge Road.
City of Milford’s current electric substation on Elks Lodge Road.

By Terry Rogers

On Tuesday, May 26, 2015, Milford City Manager, Hans Medlarz, discussed adjusting the rules and regulations for city electric bills during a workshop held after the regular council meeting. Mr. Medlarz opened the workshop by explaining how the city purchases electric and describing why the word tariff was used.

“After a discussion with Councilman (Chris) Mergner, I realized that tariff has a negative connotation,” Mr. Medlarz explained. “I just want to clarify that we use the word tariff only because that is how city code refers to it. I also realized that many council members did not understand how we purchase power and thought it might be beneficial to explain that before going into the changes we need to make.”

According to Mr. Medlarz, the City of Milford purchases power as members of the Delaware Municipal Electric Corporation (DEMEC). DEMEC purchases wholesale power. Since members are also part-owners of DEMEC, the city has a stake in the power plant in Smyrna, one in Ohio and a wind plant in Pennsylvania. There are also several solar facilities owned by DMEC, including the one on Route 14 in Milford, DE. DEMEC provides approximately 40 to 45 percent of the power used by the city.

“We must pay for transmission costs,” Mr. Medlarz explained. “We have to move the power from where it is generated to where it is used. This is why the Smyrna plant is so important as it is less expensive to move the power from Smyrna than it is from Ohio. We also must pay the portion of electric not covered by DEMEC.” Mr. Medlarz said that it is expected that wholesale prices will increase over the next 24 months due to issues that cannot be controlled by DEMEC or the City. Therefore, the City must decide how to handle those increases while also continuing with necessary preventative maintenance.

Mr. Medlarz explained that he and members of council were often asked why Delaware Electric Co-Op was able to provide electric at a significantly lower rate. He explained that Delaware Electric Co-op purchased power as a member of the Old Dominion Co-Op. Looking at the way Delaware Electric Co-op is structured, Medlarz says he expects them to face market forces even greater than the city and felt that gaps between electric fees would close significantly over the next few years. Mr. Medlarz believes that the city was better equipped to handle the increases than Delaware Electric Co-Op. However, there was one area where the city could adjust in order to help reduce the impact of the expected increases.

“We must address delinquencies,” Mr. Medlarz said. “Our delinquencies are rising by $60,000 each year. We are struggling with back and forth cut-offs, with people who are cut off one day and come back in the office the next to have the electric turned on. In reviewing the city’s electric ordinance, I found that it had not been revised in ten years and I feel it might be time to make some changes, especially in the area of delinquency.”

One suggestion Mr. Medlarz made was having longer hours at the Customer Service Office on cut-off days. Since there are a number of customers who are not paying their bill until they get a cut-off notice, Mr. Medlarz said that leaving the office open until 8 or 9 PM would allow those customers to get in before the electric was turned off. Mr. Medlarz also suggested a $15 fee to issue refunds on electric service.

“Right now, we automatically issue a refund, even if it is a minimal amount,” Mr. Medlarz said. “Unfortunately, we are sending small checks of $4.59, $6.99 out to addresses that turn out to be invalid. The check comes back and we then must send it to the state for tracking. The fee would require anyone who is expecting a refund to come into the office, fill out a form with the address they want the refund sent to and pay the fee. It would eliminate handling small refunds twice and customers who were owed significant amounts of money will not mind paying the fee.”

In addition to those changes, Mr. Medlarz said that the City should take steps to require all electric meters to be removed from pedestals and placed in the front of the homes rather than in back like many are currently. The reason is that the city is now using automated meter reading which will not work accurately if the meter is behind a house or on a pedestal. The city would pay for moving the meters to the proper location.

“However, if someone is building a new home and they want the meter located somewhere other than where the city wants to put it, they must pay for the additional fee,” Mr. Medlarz said. “For example, if the meter should be located in the front of the house and they want to locate it in the back, which will require additional services, they should pay the difference in cost. Currently, we do not charge for that.”

Residential and commercial customers are no longer being treated differently when it comes to disconnected service. Mr. Medlarz said that the Customer Service Department had been treating them differently until he pointed out that there was nothing in the ordinance that permitted that. He suggested a clearer notification for when electric would be cut off and said that the ordinance should include notification of the owner of a rental property where cutting off electric could put the home or business in eminent danger.

“We have a few customers who are running businesses out of their residence,” Mr. Medlarz said. “This means they are running up exceedingly high electric bills. We need to add into the ordinance that when a residence reaches a certain level of electric use, they are moved to the next tier just as a commercial property would be. We are also going to be pushing residents and businesses to use more LED lighting.”

Mr. Medlarz proposed that the City raise the renter electric deposit from $100 to $250 as many of the delinquent, uncollectible accounts in the city were from renters who had moved away and left no forwarding address. The city would provide a waiver for landlords who would vouch for the renter and agree to pay should the renter default on the bill in order for the deposit to be waived.

Councilman Mergner suggested that council also needed to educate the public as there was a huge misunderstanding in the city of how electric is purchased.

“The biggest complaint I get is about the electric bills,” Councilman Mergner said. “People see those panels and wonder why their bills haven’t gone down. They don’t have any idea how we go about getting power.” Mr. Medlarz said that the changes to the ordinance would be presented at a public hearing and that he hoped to fill the chamber with citizens so that they could get a better understanding of how the electric department operated in the City.